Thank you for the opportunity to provide input on this question.
By way of a brief introduction to our company, Clean Current is a technology developer of river and tidal turbines that generate renewable electricity through water currents. We have been around since 2001, and I think it is safe to say that we're recognized as one of the pioneers globally.
I'll be giving a perspective on your questions from the standpoint of marine energy because that is where our experience lies. We sent over a document, so I won't repeat every word, but I will follow that general outline and the questions asked of us.
On where the marine renewable energy sector is at the moment, I would characterize it as being at the pre-commercial stage. There have been a number of R and D initiatives. The technology has been under development in a meaningful and material way for about 10 or 15 years, and in various other ways for the last 30 years. At the moment, there are also an increasing number of pre-commercial demonstration projects, consisting mainly of single-unit installations at either a test centre or another control centre where data can be gathered on performance and environmental impact and that sort of thing.
The next stage of the technology development, I would say, is to move from this pre-commercial stage to a commercial stage consisting of multi-unit arrays, either in rivers or in the ocean, in the form of multi-unit power projects.
In which areas is Canada a leader, and in what areas can it improve? It is safe to say that the U.K. is the recognized global leader in marine renewable energy. It created one of the first and the largest marine energy test centres and has demonstrated clear political support for marine energy. This has been demonstrated in things like funding for R and D and market studies and the like; funding for the creation of quasi-governmental, governmental, and non-governmental agencies; financial support for the demonstration of technologies; the introduction of feed-in tariffs and other market-pull mechanisms; and the active delineation of resources and, as of a few years ago, the active licensing of areas that can be exploited for tidal energy production.
That said, Canada is also recognized as one of the leaders. The vast majority of the work in this area is taking place in the U.K., Canada, France, and increasingly in Asian countries like Korea. As I said, Canada is recognized as a leader. It has, of course, an immense amount of potential resources and it has certainly contributed to the development of the industry in various ways. The test centre set up in the Bay of Fundy, Nova Scotia, the FORCE centre, is recognized worldwide and is one of the largest grid-connected test centres.
Of course, Canada is also a leader of in-river electricity generation. That is recognized by a number of projects that have taken place across the country, including here in British Columbia and a number of initiatives in Quebec. There are new initiatives popping up in Manitoba.
Although there has been a great deal of effort, there are certainly areas in which Canada can improve. The need for a greater number of funding mechanisms bears repeating, even though it sounds trite. Other areas include a more established feed-in tariff mechanism or other market incentive programs and a greater engagement of the academic community and more applied academic-industry collaborations. That is one of the things that stands out for me—and, by the way, I've just returned from an international tidal energy conference in London last week, where I got a very useful perspective on where the industry is and how things are progressing in the U.K.
In this area, academic and industry and governmental collaborations have struck me as being significant.
There's also a need to focus on how to accelerate the really strategic parts of this industry. There are some key challenges to generating energy, either in rivers or in the tides, and there are some significant obstacles that I think can be overcome if resources are targeted towards them.
I think we also need a better identification of our tidal and river sites. There are initiatives here in Canada that identify potentially useful and resource-rich sites, both in river and in tidal, but a more specific and targeted initiative would be very useful.
Finally, I think there could be improvement in the way that regulators approach this kind of energy development scenario.
As for what the most promising technologies are, I'll speak from the perspective of river and tidal. There's no doubt that there are some significant river innovations. Utilities in Quebec and in British Columbia in particular, but also elsewhere, have been participating in various demonstration projects in order to assess the performance and the viability of these technologies. Nova Scotia is revealing itself as one of the leaders in Canada in the marine energy sector, not only because it hosts the Fundy FORCE installation, but also because of its own feed-in tariff initiatives for both community and larger-scale tidal energy projects.
In building a viable industry, there are two main challenges: reliability of the technology and cost reduction, or cost-competitiveness. The reliability seems obvious, but it bears repeating that we operate in a very hostile environment. Rivers and most certainly oceans present a very difficult environment in which to operate machinery. Not only is it difficult to install machinery, but maintenance is also very difficult. To access machinery and equipment on a regular basis is certainly a challenge. The cost of building prototypes and performing larger-scale tests is high, and it takes a long time to develop a prototype, test it, and bring it to market. This is also very much a challenge for our industry.
At this point, I would most definitely like to add our voice of support for organizations such as Sustainable Development Technology Canada. We have benefited from support that SDTC has provided to us for our pre-commercial demonstrations. Without that support and without the funding we got, which we were also able to leverage with private funds, we would not be in the position we are in today. I would strongly encourage the government to further support SDTC.
What can the Canadian government do? I think number one on my list relates to scientific research and experimental development credits, SR and ED credits. I'm aware that as of January 1, 2014, capital expenditures for SR and ED credits will no longer qualify. I have to underline that this will have a very important impact on small and medium-sized enterprises like our own that are engaged in what is undeniably technology development with a high capital cost. Without the ability to access the kinds of tax credits that we have had in the past, we will be at a real disadvantage. One suggestion is that small and medium-sized enterprises should be exempted from this new rule under the SR and ED credit system.
The other way in which the Canadian government can assist is by developing and implementing a feed-in tariff that would apply to all marine renewable energy projects. We suggest that this type of tariff be applied to the life of the project. That sends a real message of predictability and bankability to the various players that need to be involved in projects.
We also think a one-window regulatory process is an extremely important element. We have recently been through a very rigorous regulatory process in Manitoba, which involved, I would say, over a dozen different departments and permits. It took a very long time and was very resource intensive.
Finally, we need shared infrastructure: I think initiatives like FORCE in Nova Scotia, to which the government has contributed, are really useful, and there should be more.
That brings my remarks to a conclusion, but I would hasten to say that there have certainly been many ways in which the Canadian government has supported renewable energy in the past. My remarks are by no means meant to be a criticism. Hopefully they are delivered as a set of constructive suggestions.